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January 17, 2019Los Angeles, CA, United StatesIntellectual Property Rights and Commercial Fraud

Los Angeles-area electronics distributor pleads guilty to selling counterfeit integrated circuits with military and commercial uses

SANTA ANA, Calif. - The owner of PRB Logics Corporation, an Orange County-based seller of electronic components, pleaded guilty Thursday to federal charges of selling counterfeit integrated circuits, some of which could have been used in military applications.

Rogelio Vasquez, 44, pleaded guilty to one count of trafficking in counterfeit military goods, two counts of trafficking in counterfeit goods, and one count of wire fraud.

The investigation into Vasquez and PRB Logics is being conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Defense Criminal Investigative Service, and the National Reconnaissance Office, Office of Inspector General (OIG).

“HSI is committed to working with our law enforcement partners to target counterfeit items entering DoD’s Supply Chain and threatening U.S. critical infrastructure,” said Mark Zito, Assistant Special Agent in Charge for HSI Los Angeles in Orange County. These parts carry the potential to delay DoD missions, affect the integrity and reliability of weapons systems and imperil the safety of our service men and women.

When he pleaded guilty Vasquez admitted that he imported old, used, and/or discarded integrated circuits from Chinese suppliers that had been repainted and re-marked with counterfeit logos. The devices were further re-marked with an altered date code, lot code and/or country of origin code, to appear as if they were new and original equipment manufacturer ("OEM") parts. Vasquez then resold the counterfeit circuits to customers in the United States without disclosing they were repainted and/or re-marked.

"Counterfeit and bogus parts that don't meet specifications pose a threat because of their potential failure or substandard performance," said Nick Hanna, U.S. Attorney for the Central District of California. “Some of the counterfeit parts in this case were installed in military applications, which means the trafficking of these circuits posed a threat to national security."

In the plea agreement, Vasquez admitted that in approximately August 2012, he purchased counterfeit integrated circuits from China and sold them to a defense subcontractor located in the U.S., which, in turn, supplied the counterfeit parts to a prime defense contractor. The counterfeit parts ended up in a classified weapons system used by the U.S. Air Force. He also admitted that in April 2016, he sold eight counterfeit integrated circuits that he believed would be used by the U.S. military in the B-1 Lancer Bomber military aircraft.

Vasquez further admitted that in April and May 2016, he sold approximately 8,000 counterfeit integrated circuits to a company, which resold most of them to a defense contractor that does business with the U.S. military. The defense contractor bought the parts to use in products for numerous customers, including the U.S. Army, the U.S. Navy, and the U.S. Marine Corps.

Vasquez, who agreed to forfeit $97,362 in cash and more than 160,000 counterfeit and suspected counterfeit integrated circuits seized during the investigation, is scheduled to be sentenced on May 10, 2019, before U.S. District Judge Staton.

The criminal case is being prosecuted by Assistant U.S. Attorney Lisa E. Feldman of the Cyber & Intellectual Property Crimes Section, Los Angeles. The complaint seeking the forfeiture of the seized funds was filed by Assistant U.S. Attorney Steven R. Welk, Chief of the Asset Forfeiture Section, Los Angeles.

Updated: 02/05/2019